Balfour CEO: Pipeline With Welltower On Track To Bring Luxury Model To East Coast Metros

After forging a partnership with Welltower (NYSE: WELL) in 2019, Balfour Senior Living CEO Michael Schonbrun spoke of plans to expand the portfolio — including by bringing the company’s high-end model to the East Coast for the first time.

Despite the unexpected challenges posed by Covid-19, work on the development pipeline moved forward, and details of the first projects are now emerging. 

Balfour will debut on the East Coast with a community near Boston in Brookline, Massachusetts. Construction could start before the end of the year, Schonbrun told Senior Housing News. 

Washington, D.C. will be another new market for Balfour, with a project in the Palisades neighborhood near Georgetown. Trammell Crow is working with Balfour and Welltower on this development, which — like the Brookline community — is slated to open in 2023.

And Balfour also will be expanding its footprint in Colorado, with plans coming together for a community in Fort Collins. Louisville, Colorado-based Balfour already operates five properties in the Centennial State, as well as one community in Ann Arbor, Michigan.

In its forthcoming projects, Balfour is sticking with the design approach that has proven successful, of creating unique building designs that reflect the local area, including through the preservation and integration of historical structures. And, Schonbrun is gratified to see that some design elements that faced criticism — such as having expansive common spaces — have proven their value during Covid-19.

Schonbrun is optimistic about Balfour’s pandemic recovery, with occupancy rebounding back to 95%-plus in some communities; and, he is focused on the labor challenges facing the industry, with the “number one priority” for the company to be the “employer of choice.”

Bringing Balfour to new markets

Despite its relatively small portfolio, Balfour has gained widespread recognition with high-impact projects such as its Riverfront Park community in Denver — which, among other distinctions, took top honors in the 2015 Senior Housing News Architecture & Design Awards.

One key feature of Riverfront Park is the incorporation of the historic Moffat Depot, which was Denver’s second train station and a city landmark. Balfour will leverage this adaptive reuse expertise as the provider enters the Boston market. 

The Brookline development is taking shape on the former campus of Newberry College. The college shut down in 2018, and Welltower subsequently acquired the real estate for $34 million — an attractive price, thanks in large part to Newberry’s need to rapidly close the sale, according to an April 2020 presentation on the project. 

The redevelopment of the campus involves various components, including affordable housing and the Balfour community. Balfour at Brookline will offer independent living, assisted living and memory care on a rental basis; the architecture will be in the New England vernacular and feature the historic preservation of Mitton House, built in 1896. Balfour and Welltower are working with New York City-based Robert A.M. Stern Architects, which also worked on Riverfront Park.

Mitton House

Historic preservation also will be a component of the Fort Collins project, where Balfour is proposing to bring 200 units of independent living, assisted living and memory care to a site that formerly was a farm. Plans call for the adaptive reuse of a barn and two cottages.

“It gives the community an identity and roots in neighborhood history,” Schonbrun said, of why Balfour likes to incorporate the adaptive reuse of historic buildings. “ … We respect the community we’re building in. What better way to show respect?”

Washington, D.C. was another metro area that Schonbrun name-checked in 2019, as being of interest for expansion. His partner and Balfour co-founder Susan Juroe brings first-hand knowledge of this area, having worked there for two decades.

The Balfour at Palisades project is part of a proposed two-building redevelopment of a site formerly occupied by a Safeway store, with Perkins Eastman as the architect. In addition to the senior living building — a mix of independent living, assisted living and memory care — the proposal envisions a substantial retail component.

Balfour is far from the only senior living provider targeting the D.C. market for growth. Among other projects underway, Mather is constructing a highrise life plan community in Tysons; Silverstone is pursuing an ambitious pipeline with Watermark Retirement; and Galerie Living is bringing its luxury Corso brand to the area. 

But Schonbrun is confident in Balfour’s differentiated model, which is designed to serve a discerning clientele by delivering both architecturally impressive buildings and a boutique experience — including by staffing sophisticated life enrichment directors who are well-versed in the local culture and cuisine, and offering amenities such as Tesla sedans.

Over the years, Schonbrun has had to swim against the tide to bring the Balfour vision to life — for instance, when working on his first independent living community, his architect pushed back on his vision to create a large common space on the first floor.

“What you want to do is maximize every square foot for leasable space,” Schonbrun said, describing what the architect told him. “You should not give up this prime real estate on the first floor, on the corner of the building closest to the street where folks will be driving in from.”

But Schonbrun stuck by his vision to “have a place that’s attractive and compelling and can be used,” and created The Chautauqua Theater. The space can be used for movie viewings and hosts performers and other events.

During the pandemic, a group of Balfour residents used the theater to rehearse a production of the play “Love, Loss and What I Wore,” which they went on to perform at the Boulder Dinner Theater in April 2021.

Coming out of Covid-19, Schonbrun anticipates that residents will want larger residential units but also that they are hungry for socializing and a sense of community, making inviting and expansive common spaces all the more important.

He’s already seeing evidence for this in occupancy rates; after falling to the 70s during the pandemic, some communities are back at the 95%-plus level, with others in the high 80s. Pre-pandemic, Balfour’s occupancy typically was in the mid- to high-90% range.

Penciling out larger units and larger common spaces is not easy, and Balfour does charge monthly rates that are usually about 10% to 15% higher than the other luxury products in their markets — but Schonbrun emphasized that at any price point, the value of space should not be pegged only to how much revenue it directly generates but how much occupancy it helps drive.

“It’s helped us create a more unique identity, which appeals to folks that are our target population,” Schonbrun said, of the overall design approach. “These are people who have been successful in their lives and their businesses and their personal lives by being a little adventurous and innovative.”

Balfour as employer of choice

In addition to making progress on the portfolio expansion — Welltower and Balfour are evaluating other potential East Coast sites — Schonbrun is focused on rising to the intense labor challenges facing senior living providers and other employers across various sectors.

“Number one on our list of priorities for the company is to become the employer of choice,” he said.

The company is “pushing hard” to raise wages, particularly for care staff, but this is only one of several steps required, Schonbrun said.

“Even for a company like ours, which charges the highest rates, typically, in the market, there are limits to what we can pay,” he said. “We need to find people who want to do this kind of work — who enjoy the collaboration with coworkers and colleagues, and have bosses who are respectful and mentors and teaching them. That’s really our number one challenge.”

Balfour is considering how to create stronger “buddy systems” for new employees, and evaluating how to make smarter hiring decisions in identifying candidates who will embrace senior living work.

And on the retention front, Balfour is evaluating how to further strengthen training and provide more opportunities for upward mobility.

The current labor crisis has been largely precipitated by the pandemic, but even when these immediate factors are resolved, Schonbrun foresees ongoing workforce challenges for the senior living sector.

Longer-term challenges will require some large-scale solutions — for instance, addressing the “chaos in our immigration policies,” Schonbrun said. But senior living providers must take action now and find ways to succeed in tighter labor markets going forward.

“Senior housing companies that find a way to deal with that … are going to be the winners,” Schonbrun said.

Companies featured in this article:

, , , , , , ,